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How to open an offshore company in the UK?
The UK offshore is a respectable European jurisdiction with a good reputation and possibility to optimize tax burden. Despite the high profit tax, there is a legitimate opportunity to optimize it, in some cases leveling to zero.
The popularity of the UK as an offshore zone seems surprising to many people because of not very flexible legislation. However, if you analyze the jurisdiction in detail, you will find a number of advantages. In Ukraine, for example, it is impossible to protect reliably the ownership of your business or obtain the most transparent and fair decision of a local court. And these points are always active in Britain. This country is very popular among Ukrainian businessmen who develop software, since British jurisdiction is more suitable for the intellectual type of business.
Advantages of offshore in the UK:
- Stability in political terms;
- High reputation;
- Absence of taxation, subject to the requirements of non-conducting business on English territory and non-residence of partners.
Features of taxation in the UK for non-residents
If the management of a company in the UK is carried out from another country, then its owners will not be considered residents of the United Kingdom and will be exempt from taxation. This became possible, due to the ratification of the treaty, based on the model of the Organization for Economic Development and Cooperation, in order to avoid double taxation. A non-resident company is obliged to pay taxes to Britain provided that the source of income is within an offshore country. The contract should clearly state where the legal entity is located and where the company’s management takes place.
The choice of the location of the company must meet the following requirements:
- No restrictions on currency transactions;
- The tax rate is low;
- Availability of a double taxation agreement.
The company can obtain the status of non-resident, if it is engaged in activities that allow the conduct of authority from the other country.
If the company operates in the UK, then it will be taxed according to the standard English tax law, for all articles of income that are received from sources in the territory of the country.
Major British taxes:
- VAT - its amount may vary from 20% to 5%, and in some cases “fall” to zero.
- Income tax is 21% of the amount of income.
A zero tax rate can be obtained if the sphere of the company’s business concerns such products as food, children’s clothes and footwear, periodicals, books and goods for the disabled.
Popular forms of registration of companies in England:
- Limited Liability Partnership (LLP) - combines legal transparency and tax flexibility. It is created by at least two people, not necessarily residents of Britain. If the company does not work on English territory, then it is not taxed.
- Private Limited Company (LTD) - can be created by one person, who can also be a director. If the company does not operate in England, then it is also not taxed.
It is unknown what forms are most often chosen by businessmen from Kiev or other regions of Ukraine. Everything depends on the goals pursued by the company, preferring offshore. If the company wants to become a resident of the country and get the corresponding certificate, then it is better to choose the LTD form. If it is necessary to transfer funds to offshore, then it’s better to use an affiliate LLP form.